Brown Cnty. v. Brown Cnty. Taxpayers Ass'n

400 Wis.2d 781

971 N.W.2d 491

2022 WI 13

BROWN COUNTY, Plaintiff-Respondent,

v.BROWN COUNTY TAXPAYERS ASSOCIATION and Frank Bennett, Defendants-Third-Party Plaintiffs-Appellants,

v.Peter Barca, Secretary, Wisconsin Department of Revenue, Third-Party Defendant-Respondent.

No. 2020AP940

Supreme Court of Wisconsin.

Oral Argument: November 16, 2021

Opinion Filed: March 4, 2022

For the defendants-third-party-plaintiffs-appellants, there were briefs filed by Richard M. Esenberg, Anthony F. LoCoco, Lucas T. Vebber and Wisconsin Institute of Law & Liberty, Milwaukee. There was an oral argument by Anthony F. LoCoco.

For the plaintiff-respondent, there was a brief filed by Andrew T. Phillips, Steven L. Nelson, Douglas M. Raines, Christopher E. Avallone and von BRIESEN & ROPER, S.C., Milwaukee. There was oral argument by Andrew T. Phillips.

There was an amicus brief filed on behalf of the Wisconsin Counties Association by Joseph L. Olson and Michael Best & Friedrich LLP, Milwaukee.

ANN WALSH BRADLEY, J., delivered the majority opinion of the Court, in which ROGGENSACK, DALLET, HAGEDORN, and KAROFSKY, JJ., joined. REBECCA GRASSL BRADLEY, J., filed a dissenting opinion, in which ZIEGLER, C.J., joined.

ANN WALSH BRADLEY, J.

¶1 This case is before the court on certification by the court of appeals pursuant to Wis. Stat. § (Rule) 809.61 (2017-18) after the circuit court granted summary judgment to Brown County.¹ The circuit court determined that the County's sales and use tax ordinance was lawful.

¶2 The court of appeals certified the following issue regarding how counties may utilize the proceeds of enacted sales and use taxes:

Does the sales and use tax Brown County enacted in 2017 and implemented as part of its 2018 budget process "directly reduce the property tax levy," as required by Wis. Stat. § 77.70 (2015-16),^{[2 ]} if the proceeds are designated to fund new capital projects that collectively would otherwise exceed the levy limits established by Wis. Stat. § 66.0602, but the County could otherwise fund the projects by borrowing?

¶3 The appellant, Brown County Taxpayers Association (BCTA), contends that Brown County's sales and use tax is invalid because it does not dollar-for-dollar directly reduce the County's property tax levy in violation of Wis. Stat. § 77.70. Rather, BCTA contends that the sales and use tax is impermissibly used to fund new capital projects.

¶4 In contrast, the County asserts that its sales and use tax complies with Wis. Stat. § 77.70. It argues, in accordance with a longstanding Attorney General's opinion, that pursuant to § 77.70 a sales and use tax may be used by a county to fund any project that could otherwise be paid for with property taxes.

¶5 We conclude that Brown County's sales and use tax ordinance is consistent with Wis. Stat. § 77.70. Section 77.70 does not require a dollar-for-dollar offset to the property tax levy. Instead, it authorizes counties to impose a sales and use tax for the specific purpose of directly reducing the property tax levy, while leaving the means to accomplish that purpose up to the county. Because the County's ordinance does in fact directly reduce the property tax levy by funding projects that would otherwise have been paid for through additional debt obligations, we determine that the ordinance is permissible.

¶6 Accordingly, we affirm the order of the circuit court.

I

¶7 On May 17, 2017, the Brown County Board of Supervisors enacted an ordinance relating to a temporary sales and use tax within the County. The ordinance provided for a 0.5 percent sales and use tax that would be in effect for a period of 72 months.

¶8 Within the ordinance itself is a specification regarding how the money collected from the sales and use tax is to be used. Namely, the ordinance provides that revenue from the tax "[s]hall not be utilized to fund any operating expenses other than lease payments associated with" specified capital projects. It further indicates that the sales and use tax revenue "[s]hall be utilized only to reduce the property tax levy by funding the below listed specific capital projects, as well as funding said specific capital projects' associated costs as deemed appropriate by Brown County administration."

¶9 The expenses for specific capital projects intended to be funded from the sales and use tax revenue include: (1) $15 million for the Expo Hall project; (2) $60 million for infrastructure, roads, and facilities projects; (3) $20 million for jail and mental health projects; (4) $20 million for a library project; (5) $10 million for maintenance at the Resch Expo Center; (6) $10 million for medical examiner and public safety projects; (7) $1 million for a museum project; (8) $6 million for parks and fairgrounds; and (9) $5 million for a STEM research center project.

¶10 Totaling $147 million, these expenses were determined by members of the County Board to fund "necessary projects" for the "long-term viability of the County." Without the sales and use tax, the County stated that these capital improvements would have been funded through new borrowing and the accompanying issuance of debt obligations.

¶11 Additionally, the ordinance contained a mill rate³ freeze. This provision states: "While this temporary sales and use tax Ordinance is in effect, the Brown County Mill Rate shall not exceed the 2018 Brown County Mill Rate." It further provides that if the mill rate does exceed the 2018 rate during the life of the ordinance, that the sales and use tax "shall sunset on December 31 of the year the Brown County Mill Rate exceeds the 2018 Brown County Mill Rate." A sunset provision is also included in the ordinance in the event the County issues any general obligation debt, excluding refunding bonds.

¶12 Brown County relied on the sales and use tax revenue in crafting its 2018 budget. For that year, the County's finance director estimated the sales and use tax proceeds to be $22,458,333. This amount was incorporated in the 2018 budget, which was adopted by the County Board and signed by the County Executive.

¶13 Shortly after the budget was enacted, BCTA filed suit against the County, arguing that the sales and use tax ordinance violates Wis. Stat. § 77.70. Specifically, BCTA argued that the ordinance does not "directly reduc[e] the property tax levy" as § 77.70 mandates. It sought a declaratory judgment that the ordinance is invalid and an accompanying injunction against the ordinance's enforcement. BCTA's lawsuit was ultimately dismissed without prejudice due to BCTA's failure to comply with statutory notice of claim procedures.⁴

¶14 After dismissal of its lawsuit, BCTA served a notice of claim on the County. The County disallowed the claim and subsequently filed this lawsuit in the circuit court, seeking a declaratory judgment as to the validity of the sales and use tax ordinance. BCTA filed a counterclaim, asserting that the ordinance is void as a matter of law.

¶15 Both parties moved for summary judgment. BCTA renewed its argument that the ordinance does not "directly reduc[e] the property tax levy" as Wis. Stat. § 77.70 requires and that such direct reduction can only be accomplished by a dollar-for-dollar offset. In contrast, the County asserted that the ordinance is valid, suggesting that § 77.70 is an enabling statute that allows a county to impose a sales and use tax but is silent on how sales and use tax proceeds are to be used.

¶16 The circuit court granted Brown County's motion for summary judgment and denied that of BCTA. It concluded that a dollar-for-dollar reduction of the property tax levy with sales and use tax revenue "is not the solely lawful operation required by the plain language of the statute." Further, it determined that "[i]f Wisconsin Statute section 77.70 were to require a dollar-for-dollar reduction of a county's property tax levy, then the Wisconsin Legislature would have said so in the body of the statute, and it would have spelled out the process for Wisconsin counties to follow."

¶17 BCTA moved for reconsideration, which the circuit court denied. Subsequently, BCTA appealed, and the court of appeals certified the appeal to this court.

II

¶18 We are called upon to review the circuit court's determination on the parties' cross-motions for summary judgment. This court reviews a summary judgment decision independently of the decisions rendered by the circuit court and court of appeals, applying the same methodology as the circuit court. MacLeish v. Boardman & Clark LLP, 2019 WI 31, ¶22, 386 Wis. 2d 50, 924 N.W.2d 799. Summary judgment is appropriate where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Id.

¶19 In our review, we interpret several statutes. Statutory interpretation presents a question of law we likewise review independently of the determinations of the circuit court and court of appeals. Sw. Airlines Co. v. DOR, 2021 WI 54, ¶16, 397 Wis. 2d 431, 960 N.W.2d 384.

III

¶20 We begin by setting forth necessary background regarding the statutes at issue and county property tax levies. Subsequently, we present and analyze the parties' arguments concerning the validity of the Brown County ordinance at issue.

A

¶21 All counties in Wisconsin, including Brown County, are required by statute to adopt an annual budget. See Wis. Stat. §§ 59.60, 65.90. As part of the budgeting process, Brown County is required to "list all existing indebtedness and all anticipated revenue from all sources during the ensuing year and shall likewise list all proposed appropriations for each department, activity and reserve account during the said ensuing year." § 65.90(2).

¶22 From this data, a county calculates its property tax levy. To do so, it adds the operating levy (the revenue necessary to fund county operations) with the debt levy (the amount necessary to pay debt service on county borrowing). The types of expenditures that make up the operating levy include, among other things, necessary expenses...